IMovie can import your Photoshop images without converting them to PICTs or JPGs.
When importing images containing text, it's crucial you avoid the text image being resized as it is imported to iMovie. The image of text is extremely fragile, and doesn't survive resizing. So when an image has text, CROP the image to 640x480 in Photoshop -- do NOT resize it to 640x480. Then import the image with the Ken Burns zoom set to 1.00.
When importing text, it's sometimes effective to use iMovie's sharpen special effect, set to the minimum.
The recommended minimum image size is 640x480. When using Ken Burns to pan or zoom the image, raise the minimum to (at least) that size in proportion to the KB zoom. So if the KB zoom is 2.00, use 1280x960 as the minimum. Generally, you don't have to worry about going too large, only too small.
iMovie cares ONLY about the pixel dimensions, not resolution.
Be aware of a major bug in iMovie: When you click the "Create iDVD Project" button in the iDVD tab of iMovie, iMovie will ask permission to render any UNrendered images. Do NOT grant permission, or iMovie will add lots of jaggies to the images while rendering them. Instead, let iDVD render them. (Images rendered with the Ken Burns Effect do NOT have this problem. They come out great, for KB has its own rendering algorithm.)
Karl
